What’s the difference between Cash Back and Points on a credit card? Well, they are different currencies that a credit card has to offer. When you make a transaction onto your credit card, you’ll be able to choose between getting cash back or rewards points for them. Cash back hence in the name, will get you cash back on your purchases when you make a certain amount. Rewards points allows you to build up your points when you make transactions towards specific categories. However, this option is better suited for people that tend to travel more often.
 |
 |
What’s Different Between Cash Back and Rewards Points
When you get a credit card, you’re presented with different options of currencies to pick from. A cash back credit card will give you cash back once your cash balance is built up enough. There are different ways to get your cash back rewards such as: receiving them as a statement credit, a bank account deposit, or a check in the mail. It will all depend on how you choose to get your cash back redeemed.
With a rewards points card, they have different categories to pick from to gain points for your credit card. Some of the options will include travel award reservations, fixed-rate redeeming, travel credit, and item expenses. You can use your points towards travel expenses like making a reservation at a hotel.
Making purchases from the rewards program categories with your points is another option they have. However, this isn’t really the best way to use your points considering it will decrease their value. Plus, you’ll be able to transfer your points towards a rewards program that an airline or hotel is partnered with to gain more points and perks. Additionally, every card will have different ongoing rewards and benefits when you use them towards different purchases.
Cash Back vs Rewards Points
Every credit card comes with their perks and disadvantages, these will vary depending on whether or not you pick a cash back card or a rewards points card. A cash back card is easier to manage and less time consuming rather than a points based card. You won’t have to learn any new techniques to deal with their redemption. Not to mention, it’s much easier to understand and you’ll be able to set up automatic cash back redemptions. Majority cash back credit cards won’t come with an annual fee like your traditional rewards points card would.
Your value on your cash back credit card will vary depending on how you decide to use it, but they’re pretty consistent most of the time. Even if you reduce your value by making large expenses with your card, the values won’t change at all unless the dollar value decreases. Now, with a rewards points card, they will normally offer larger welcome bonuses. Typically, both cash back and rewards points have sign up bonus offers, but rewards cards have more to give their customers.
When you use a rewards points card, they also come with tons of travel perks that you’ll be able to benefit from. If you travel quite frequently, you should look into what they have to offer in this category. Normally, there are perks such as a free checked bag, airport lounge access, and better travelling experiences. These points will come with a higher value when you use them towards bookings and reservations. Depending on how you choose to use your points will reflect their value. The industrial average for these points is 0.01 per point, there are travel cards that have a better point value that you can benefit from.
Picking a Cash Back or Rewards Points Card
Getting a credit card will come with either a cash back or points option. You should pick an option that’s better suited for you in the future. If you don’t travel much, then you should get the cash back card that will be more useful. However, if you do travel a lot, then you should get a rewards points card. Even if you do find yourself travelling quite a bit, a cash back card may still be the better option for you, here’s why. Most cash back cards won’t come with an annual fee, and they have fast and simple redeeming processes.
Typically, many rewards points credit cards will come with an annual fee charge, that’s one of the major differences between these two cards. When you use a rewards credit card, your values will depend on how you use your points. If you travel a lot, then you’ll want to mainly focus on the travel categories and take advantage of them. The more you use your card to make purchases, the more you’ll build up on points. When you rack up enough points, it will make the annual fee worth it considering you might be able to pay it off with your points. It would be a great idea if you familiarize yourself with your cards different categories. This way you’ll be able to find ways to maximize your points and have them redeemed.
Conclusion
Overall, if you decide to get a cash back or a rewards points credit card, you’ll see that there’s much to offer for both cards. It all depends on how you normally use your card and what you make transactions towards. Keep in mind that these two options have benefits and disadvantages that you’ll have to be well aware of to be able to use your card to its full potential.
If you’re interested, be sure to check out our bank rates and bank promotions to see other great offers for you!
